Coping with Covid-19 – Croatian Post

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Interview with Ivan Čulo, CEO of Croatian Post, reflecting on how the global pandemic has affected the postal operator

This feature represents part of a series of interviews with executives from posts around the world looking at how the global pandemic affected operations. Read the June issue of Parcel and Postal Technology International magazine and follow the series at www.parcelandpostaltechnologyinternational.com to find out how other posts performed during these unprecedented times.

How is the pandemic affecting the post?
This was, and still is, an unprecedented crisis for the entire world and postal operators had to adapt quickly to new conditions. Although many of the industries came to a standstill, postal operators around the world continued to offer services. During the implementation of strict safety measures in Croatia we had to implement many health and safety measures prescribed by national authorities. Our workers were equipped with protective gear and the delivery process was reorganized to reduce the close social contact with customers to a minimum.

Also, workers were divided into groups and the delivery process was further optimized to reduce the number of item handlings. Our business operations never stopped, we and all of our colleagues around the world found new ways to do our jobs. Due to the favorable epidemiological situation, we are witnessing a normalization of the situation in Croatia. However, the financial impacts of the crisis are significant.

International logistics is currently the biggest challenge the industry is facing since commercial airlines still do not operate at a level that can meet the needs of all postal operators.

How have parcel and letter delivery numbers fared?
Package delivery saw even higher growth than expected. Online shopping has been growing rapidly in the past years and with it the number and volume of parcels. During the coronavirus epidemic the quantity of parcels was comparable with the maximum workload period usually reserved for December. Turnover on our webshop (www.zutiklik.hr – Yellow Click) has increased fourfold since the crisis began.

On the other hand, letter volumes are down by 40-50% (mostly registered mail by all levels of government, courts etc,.). We did not plan such a steep decline in this short period, but obviously falling letter volumes are something we are expecting. Part of the reason for such decline is a destructive earthquake that hit city of Zagreb, our nation’s capital, on March 22. Since the majority of companies, courts, and government institutions operate in Zagreb, the combination of the coronavirus outbreak and the earthquake stopped or minimized their activities.

How does this period in 2020 compare with the same period in 2019?
Revenue in April fell 25%, mostly because of the decrease in the number of registered mail items. The package business was growing but was not able to compensate for such a steep decline in letters. So far, 2020 presented big challenges but we tackled them successfully. We didn’t stop with planned business investments that are critical for our growth and our abilities to meet ever-growing market demands.

Did you launch any new services to meet demand?
We teamed up with renowned Croatian food companies like Podravka and Kraš, and food product packages were also offered with free delivery on our webshop, Yellow Click. We also offered a premium same-day delivery service (through our daughter company Locodels) to our business partners.

Are you working more closely with SMEs to help them deliver?
For the last two years we have been working closely with many SMEs through partnerships with Yellow Click. We offered products from small family farms even before the crisis and during the crisis we reached out to many of them and started offering their products to customers.

How important is collaboration?
Collaboration is key to the continuity of business operations during lockdown. By working with other delivery providers we can learn from each other and implement innovative solutions to problems that we are all facing. And in international delivery it is paramount for postal operators to maintain high level of collaboration.

Did you need to hire new staff due to increased demand for delivery?
Croatian Post is one of the largest employers in Croatia, and our capacities were big enough to handle the situation of increased demand for parcel delivery. We have reassigned a certain number of postmen to our express delivery service Paket24 due to increased parcel volumes but there was no need for additional employment.

How were employees kept safe during the epidemic?
Our workers were split into groups that do not come into contact, which prevented the possible spread of the virus. The health of our workers and their families, as well as our customers, was and still is our top priority. During the lockdown period (March 19-May 11) the working hours of our post offices were shortened (at maximum from 8:00am to 5:00pm) in coordination with authorities. We have also temporarily reduced the number of open post offices from 1,000 to 800 and limited the number of customers permitted in the post office at the same time.

Our distribution center and delivery vehicles were regularly disinfected. We continually supplied our workers with protective gear and disinfectant. Every city and municipality had at least one working post office during the entire crisis period. The delivery process was also changed; postmen had to avoid personal contact with customers and maintain a safe distance at all times. Now, as national authorities have eased the measures we are slowly returning to ‘business as usual’, but are still closely monitoring the situation.

What other methods have you used to meet demand for last-mile delivery?
Croatian Post acquired startup Locodels in October last year. Locodels offers same-day delivery through a crowdsourced business model. The first partnership, between Locodels and one of the largest electronic equipment webshops, www.links.hr, was announced a few weeks ago and we are working with many business partners which will soon offer this premium service to their customers.

Did you invest in any new technology?
In September 2019 we opened the New Sorting Centre which was the largest business investment in Croatian Post’s history. There was no need for further investments in sorting since we already have state-of-the-art technology. Our parcel sorting machine can sort up to 15,000 items per hour and we can sort around 23,0000 letters per hour, which proved to be sufficient even with higher parcel volumes.

In April we announced 108 million kuna (€15.5m/US$17.5m) investment in the parcel locker network. A total of 300 parcel lockers will be placed throughout urban and vibrant areas in Croatia. Croatian Post’s partner in implementing parcel machine technology is Estonian Post, and the first batch of new parcel lockers will be operational by the end of the year.

Did you need to acquire more assets?
Croatian Post was in the biggest investment cycle in its history over the past three years since the new Development Strategy Post2022 was adopted. We invested in sorting equipment as well as sorting infrastructure in general. Also, investments in our fleet were substantial. Thanks to our efforts, we were not caught off guard with lockdown and continued with our business operations quite easily. Even when the destructive earthquake damaged our administrative building in the city center, we were able to quickly react and organize work from home for our administrative staff.

How has the post supported local communities?
Right at the start of the coronavirus outbreak in Croatia, Croatian Post started to distribute Red Cross and Croatian Caritas humanitarian packages with food and supplies to those in need, free of charge. In late March when the pandemic was at its peak, Croatian Post donated a respirator to Sveti Duh hospital. Postal workers put an extra effort to deliver pensions and social welfare to beneficiaries and for Croatian Postal Bank’s clients the service was free of charge. In partnership with Croatian startup 3dTech we also donated delivery of 3D printed visors to hospitals.

What are the three key lessons learned as a result of the pandemic and the peak volumes experienced
1. With intensive use of technology you can overcome every obstacle, especially when a few hundred of your administration employees work from home;

2.
In times of unprecedented crisis Croatian Post stood out as one of the key elements in preserving the ‘normal’ functioning of society;

3.
Because of Croatian Post’s initiatives and actions, customers had fewer reasons to go out and could stay safely at home. Food, pensions, humanitarian packages and many other products and packages found their way to customer doorsteps thanks to postal workers who continued to connect Croatia during the pandemic.

Do you think the postal service will ever return to normal?
Life must go on, and people want to continue with their lives and businesses that were put on hold for the last two months. The process will not be easy and there will be lasting effects but I strongly believe that a return to normal is possible.

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